This is a rush transcript from "On the Record," January 23, 2014. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX HOST: Did the IRS just get caught again targeting conservatives? First, the Tea Party, and now the IRS accused of trying to smoke out conservatives from Hollywood. That's right. If you aren't a typical Hollywood liberal, then you better watch out.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Absolutely, we were targeted, and it feels kind of creepy to be on somebody's enemy list, especially when it's the government.
PAT BUCHANAN, FORMER PRESIDENTIAL ADVISOR: They have a rogue agency that they knew nothing about that has 100,000 employees.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I will not tolerate this kind of behavior in any agency, but especially in the IRS.
REP. JOHN BOEHNER, SPEAKER OF THE HOUSE: My question is, who is going to jail over this scandal?
UNIDENTIFIED FEMALE: And to find out that, they are not going to press any charges, and they are saying nothing is wrong is outrageous.
(END VIDEO CLIP)
VAN SUSTEREN: And, in just minutes, a high-profile Hollywood insider, who says the IRS has targeted him, is here to go ON THE RECORD.
First, our political panel, "The Weekly Standard's" Steve Hayes; "The Cook Political Report's" Amy Water; and "The Hill's" A.B. Stoddard.
Steve, first of all, what is going on with this?
STEVE HAYES, 'THE WEEKLY STANDARD': It certainly sounds like the IRS is targeting this group Friends of Abe, which exists in Hollywood. It's part of a broader pattern we have seen of the IRS targeting conservative groups across the country.
This group is particularly interesting. It's existed mainly in street now for the better part of a decade. They don't do much. They don't have much in the way of political activities. They get together, they have a big annual dinner every year. They sometimes go out and meet at a bar and have drinks and play pool. But it's not a group that's out there actively working in politics on a day-to-week or week-to-week or month-to-month basis.
So it is curious to me that the IRS would target them and visit upon them such scrutiny, given their rather limited and pretty much harmless political activities.
VAN SUSTEREN: As I understand it, they have been given, Amy, a bunch of extra questions to answer.
AMY WALTER, 'THE COOK POLITICAL REPORT': Right.
VAN SUSTEREN: They have tried to become tax exempt for the last two years, still pending. And they feel intimidated.
WALTER: Well, you know, the reality now is, if you have any link at all to politics, anyone who is associated with your group, who has made any sort of political statements, who is out front in any way, shape, or form, and you go and you apply for tax exempt status, you are going to get a level of scrutiny.
VAN SUSTEREN: Both sides? Because I think --
WALTER: Right, the issue in this case clearly is that these were high-profile people who also happen to be Republicans. Now, what's going to be curious to see is, are we going to see more cases of this of outside groups getting scrutiny, or what we're going to see, I think, fewer people saying or fewer people going and asking the IRS for tax exempt status. Saying, you know what, let's just be a (c)4 instead of 501(c)3, so we don't have to go through these hoops.
A.B. STODDARD, 'THE HILL': I actually agree. I think that just because like-minded people want to hang out together and have good speakers come, they shouldn't be exempt from taxation. I think, given the fact that we are in the state of tremendous debt, I think the entire tax exemption system that we have and all of the specifics of it should be heavily scrutinized.
STODDARD: That said, one group should not be more scrutinized than the other if they are under the same designation and the code. Right now, there are rules that the "Wall Street Journal" reported on late last week that were written on in November, new rules designed to curtail even further any kind of political activity that these 501(c)3 groups can do. And that they -- and it was -- it was kept very quiet. But the administration has made sure through these new rules that they are going to get to do less than they even did before.
Is it political to invite Herman Cain to your dinner like Friends of Abe did? No it's not. If they don't have a political agenda, then they shouldn't be subjected to that kind of scrutiny. But some groups, I still think, should.
VAN SUSTEREN: But here's the problem. I don't know if they have to renew every year or get the whole set of questions. The Tea Party is relatively new. And anyone who is applying now, if you are going to put that harsh scrutiny on them, the people are already sort of grandfathered in, they are in good shape. It's the new group they will be pushing in.
WALTER: Is this something that happened two years ago and it was part of what we learned about with the Tea Party groups and they were part of this? And it's still today part of the issue or is it something that's happened since we learned about the scrutiny.
WALTER: You know what I mean? Is this something that is new or was it already happening at the same time?
HAYES: Or in some combination. What we saw with the Tea Party was really unprecedented. The kind of scrutiny that the Tea Party had to withstand, and the fact that the Tea Party disappeared for large stretches of the pre-2012 election cycle. I mean, you remember, there were members of the media were saying where is the Tea Party? Part of that was, of course, you know, the energy of that kind of a movement dies down or subsides a little bit. Part of it was answered by the fact that they didn't get their status that they had been seeking. When you have the Tea Party leaders appear before Congress and they were asked this question, they said basically we were rendered dormant for that time period.
WALTER: Let's be clear, there is not less money in politics now because of what's been happening with the IRS?
VAN SUSTEREN: Here is sort of the secret way you can really be awful with the IRS for something like the Tea Party or conservatives or any group, liberals or whatever, is you don't make a decision. You simply keep sending questions because, without a decision, you can't appeal to the next level. And things don't have to take two years to go through to figure out whether or not something is tax exempt now. That's the one thing I have never seen anyone really sort of hone in and look at. Was there unduly -- was there a length of time imposed on certain groups that other groups got a swifter road?
HAYES: Yeah, I think there was no question that was the case, particularly with the wave of scrutiny that the Tea Party groups had to with stand. But there is another problem. Unions are not subject to the same rules. Unions are a 501(c)5. They play by entirely different set of rules. When you, in effect, redefine politics to broaden the scope and you use it to look, particularly at conservative groups, but a wide variety of these tax exempt groups, but you don't subject unions to the same scrutiny, to the same rules, that's a built-in problem. It's baked in.
VAN SUSTEREN: A.B., that goes back to where -- you have got to do everybody, if you are going to make everyone.
STODDARD: Right. Not only is Steve right that the unions are in a different designation under the code, but obviously everyone that is under the same one needs to be held to the same argument of scrutiny. My argument is just that, in the state we are in, with our budget situation, we are not to be just exempting people willy nilly because they like to get together once in a while.